Bank Loans

The Home loan sector in India is the pi-votal role player in the growth of the real estate scenario in India. With tax incentives given to the housing finance sector in the annual budget of 2001, transactions related to buying and selling of residential properties increased considerably and were much higher as compared to the previous years.

Since the new class of buyers are relatively younger set of customers more aware about legal documentation and approvals, buyers are now more 'end-users' rather than investors. The property market in India undergoes transformation to align itself with the global standards with an increased emphasis on quality & cost control and documentation methods. In the current economy of India, the real estate sector has the maximum propensity to generate income and demand for materials, equipment and services. It can be said that housing finance companies were formed for meeting the buyer's requirements of housing loans for investing in properties. Home loans are made available by financial institutions to both Indian and NRI customers at floating and fixed rates of interest and also at attractive EMI options. Presently, home loans are available:

• For construction or buying a new home
• For home repairs and renovations
• For purchase of plots
• Against mortgage of property

No tax benefits are available for NRI customers unless they file returns and thereby become eligible to avail of the tax benefits.

Besides home loans, Commercial property loans are also available from different financial institutions in India at different rates and different upper limits.

Real estate loans are available to builders, promoters and real estate developers. The experience and financial standing of the builders is taken into account before the loan is granted which is to be returned with the minimum installments.

Today, the amount of money that a city dweller spends on rent is roughly the same or only slightly less than the amount he pays as an EMI on a housing loan. Earlier the home loan sector in India was solely dependent on nationalized and public sector banks, but the entry of public sector banks into the housing finance business marked the beginning of the first round of interest rate cuts. And this reduction in interest rates has enhanced the borrowing power of customers. Moreover, HFCs are offering various incentives to attract investors like:

• Some companies sanction the housing loan without requiring the customer to identify property as a pre-requisite for eligibility.
• Free accident insurance & property insurance.
• Waiving of pre-payment penalty.
• Waiving of processing fee.

Documents required by Finance Companies for setting up criteria for eligibility of Home loans:

The real estate boom in India has given a new dimension to the finance sector in India - both in the Home Loans and Home Insurance segments. This has not only given a competitive edge to the finance companies to provide attractive options to customers but has also contributed to the increased investments in the real estate sector. This has resulted in 13 new institutions foraying into the housing finance business in the last three years.